Can You Afford the Federal Government’s Coronavirus Spending?

The federal government has already pledged $2 trillion to help households and businesses withstand the pressure placed on them from the coronavirus. But the final price tag could end up far higher, perhaps as much as $5 trillion or more.

The national debt was already at $23.5 trillion before the CARE Act stimulus bill was passed, and it’s shot up nearly $1 trillion since the bill’s passage. By the time the bill’s money is spent, the national debt will have increased nearly 10%, and if Congress decides to pass additional stimulus spending, it could end up increasing over 20% by the end of the year.

You might ask yourself how Congress expects to pay for all of this spending, particularly since the budget deficit was already expected to exceed $1 trillion this year. In the short term, all of that new spending is going to be funded by debt issuance. That’s why the national debt will increase so much. But who’s going to purchase that debt?

Ultimately the Federal Reserve will end up monetizing a significant portion of that debt, purchasing it nearly directly from the Treasury. But down the line it will be US taxpayers paying for that new spending.

The increased amount of debt purchased by the Fed will be paid for by new money being created out of thin air. That new money will devalue the purchasing power of existing money, thus stealthily taxing investors and savers by reducing their ability to purchase the goods and services they need. Prices will rise, the dollar’s value will fall, and consumers will be worse off.

That increased debt also means increased interest payments, which will take up an even larger portion of the federal government’s budget. So either the government increases taxes to pay for that interest spending, or it cuts down on services. Either way, taxpayers are harmed.

There’s just no way to sugarcoat things – Congress is spending like a drunken sailor, aided and abetted by the Federal Reserve. And ordinary Americans will have to pay the bill for that spending sooner or later. They may not pay the bill upfront, but when it comes time to retire, they’re going to bemoan the decreased purchasing power and higher taxes that result.

That’s why it’s all the more important so save as much money as possible for retirement, to invest in assets like gold that perform well when markets are weak, and to prepare for a worst-case scenario. With Congress intent on spending as much money as possible this year, you can’t afford not to be prepared.

Share this post

Goldco’s self-directed IRA guide will help you learn everything you need to know about gold IRAs and how the process of opening a gold IRA works. This FREE GUIDE will answer many of the questions you may have about opening a gold IRA, such as how long it takes to open a gold IRA and begin investing in gold, what kind of gold is eligible for investment through a gold IRA, and how you purchase gold for your IRA.

Contact Us

Follow Us

There is no assurance that commodities, i.e. precious metals, will achieve their objectives. Return and principal value will fluctuate and your portfolio, when redeemed, may be worth more or less than the original cost. No statement, presentation, article, or any other communication is to be construed as a recommendation to purchase or sell a security, or to provide investment, legal, accounting or tax advice. Customers should consult a financial advisor, attorney or accountant for investment, tax or legal advice. Customers should carefully read all documents provided, including sales literature, invoices and agreements, before making purchases. Customers should understand that all purchases have some degree of risk. Customers should make certain that they understand the correlation between risk and return. Commodities involve risk and are not suitable for all investors.